Correlation Between Coronation Smaller and MC Mining

Can any of the company-specific risk be diversified away by investing in both Coronation Smaller and MC Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Coronation Smaller and MC Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Coronation Smaller Companies and MC Mining, you can compare the effects of market volatilities on Coronation Smaller and MC Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Coronation Smaller with a short position of MC Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coronation Smaller and MC Mining.

Diversification Opportunities for Coronation Smaller and MC Mining

-0.28

Correlation Coefficient

Coronation Smaller  MC Mining

Very good diversification

The 3 months correlation between Coronation and MCZ is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Coronation Smaller Companies and MC Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MC Mining and Coronation Smaller is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Coronation Smaller Companies are associated (or correlated) with MC Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MC Mining has no effect on the direction of Coronation Smaller i.e., Coronation Smaller and MC Mining go up and down completely randomly.

Pair Corralation between Coronation Smaller and MC Mining

Assuming the 90 days trading horizon Coronation Smaller Companies is expected to generate 0.14 times more return on investment than MC Mining. However, Coronation Smaller Companies is 7.13 times less risky than MC Mining. It trades about 0.03 of its potential returns per unit of risk. MC Mining is currently generating about -0.18 per unit of risk. If you would invest  13,425  in Coronation Smaller Companies on October 22, 2024 and sell it today you would earn a total of  129.00  from holding Coronation Smaller Companies or generate 0.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Coronation Smaller Companies  vs.  MC Mining

Coronation Smaller

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Coronation Smaller Companies are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong basic indicators, Coronation Smaller is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

MC Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MC Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Coronation Smaller and MC Mining

The main advantage of trading using opposite Coronation Smaller and MC Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coronation Smaller position performs unexpectedly, MC Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in MC Mining will offset losses from the drop in MC Mining's long position.

The idea behind Coronation Smaller Companies and MC Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Managers module to screen money managers from public funds and ETFs managed around the world.